DCIT, Circle - 10(1), Kolkata , Kolkata V. Shri Jaideep Halwasiya, Kolkata

ITA 2487/KOL/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 9836 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 19-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBILN CHOUDHURY
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

I.T.A. NO 2487/KOL/2017 ASSESSMENT YEAR: 2013- 2014 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA D BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER & SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER I.T.A. NO. 2487/KOL/2017 ASSESSMENT YEAR: 2013-2014 DEPUTY COMMISSIONER OF INCOME TAX,................. ............................APPELLANT CIRCLE-10(1), KOLKATA, AAYAKAR BHAWAN, 3 RD FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- SHRI JAIDEEP HALWASIYA,............................ .....................................RESPONDENT P-34, INDIA EXCHANGE PLACE, SAHA HOUSE, KOLKATA-700001 [PAN: AAWPH 1706 L] APPEARANCES BY: SHRI ROBILN CHOUDHURY, CIT, D.R. , FOR THE DEPARTMENT SHRI RAVI TULSIYAN, A.R., FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : SEPTEMBER 17, 201 8 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 26, 2018 O R D E R PER SHRI P.M. JAGTAP, A.M. : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-4, KOLKATA DAT ED 14.09.2017 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE DELETION BY THE LD. CIT(APPEALS) OF THE DISALLOWANCE MADE BY THE ASSESS ING OFFICER UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 AS PER RULE 8D(II) AND RULE 8D(III) AMOUNTING TO RS.99,11,183/- AND RS.18,73,77 2/- RESPECTIVELY. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS ENGAGED IN THE BUSINESS OF PROVIDING CONSULTANCY SERVICES. THE RETURN OF INCOME (REVISED) FOR THE YEAR UNDER CONSIDERATION WAS FILE D BY HIM ON I.T.A. NO 2487/KOL/2017 ASSESSMENT YEAR: 2013- 2014 PAGE 2 OF 4 22.11.2013 DECLARING TOTAL INCOME OF RS.99,80,200/- . IN THE SAID RETURN, DEDUCTION OF RS.1,98,49,627/- WAS CLAIMED BY THE AS SESSEE ON ACCOUNT OF INTEREST EXPENDITURE INCURRED IN RESPECT OF UNSECUR ED LOANS. AS FOUND BY THE ASSESSING OFFICER, UNSECURED LOANS AVAILED BY T HE ASSESSEE WERE PARTLY UTILIZED FOR MAKING INVESTMENT IN SHARES, TH E INCOME FROM WHICH WAS EXEMPT FROM TAX. HE, THEREFORE, APPLIED RULE 8D (II) AND WORKED OUT THE INTEREST EXPENDITURE INCURRED IN RELATION TO TH E EXEMPT INCOME AT RS.99,11,183/- AND MADE A DISALLOWANCE TO THAT EXTE NT UNDER SECTION 14A. HE ALSO INVOKED RULE 8D(III) AND MADE A FURTHER DIS ALLOWANCE OF RS.18,73,772/- UNDER SECTION 14A BEING 0.5% OF THE AVERAGE VALUE OF INVESTMENT MADE BY THE ASSESSEE IN SHARES. ACCORDIN GLY, TOTAL DISALLOWANCE OF RS.1,17,84,955/- WAS MADE BY THE AS SESSING OFFICER UNDER SECTION 14A IN THE ASSESSMENT COMPLETED UNDER SECTI ON 143(3) VIDE AN ORDER DATED 30.12.2015. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD . CIT(APPEALS) DECIDED THE ISSUE RELATING TO DISALLOWANCE UNDER SECTION 14 A VIDE HIS IMPUGNED ORDER AS UNDER:- THE AO HAS MADE DISALLOWANCE OF RS.99,11,183/- UND ER RULE 8D(III). HOWEVER, THE ASSESSEE HAS SUBMITTED T HAT HE HAS SUO MOTTO DISALLOWED INTEREST EXPENDITURE OF RS.1,21,44,440/-. AS PER THE AR, THE ASSESSEE HAS M ADE INTEREST PAYMENT OF RS.3,19,94,031/- WHILE IN THE COMPUTATION OF INCOME, THE ASSESSEE HAS CLAIMED AN INTEREST DEDUCTION OF ONLY RS.1,98,49,627/-. SINCE THE ASSES SEE HAS HIMSELF DISALLOWED HIGHER AMOUNT OF INTEREST, THERE FORE, NO DISALLOWANCE UNDER RULE 8D(II) CAN BE MADE. THE AO MAY VERIFY THE SAME AND ALLOW APPROPRIATE RELIEF. THE AO HAS FURTHER DISALLOWED RS.18,73,772/- UNDER RULE 8D(III). THE LD. AR STATED THAT THE ASSESSEE H AS NOT CLAIMED ANY OVERHEAD EXPENSES AND, THEREFORE, NO SU CH DISALLOWANCE CAN BE MADE. THE ASSESSEE HAS RELIEF O N THE FOLLOWING CASE LAWS:- (1) JUSTICE SAM P. BHARUCHA VS.- ACIT, ITA NO. 3889/MUM/2011; I.T.A. NO 2487/KOL/2017 ASSESSMENT YEAR: 2013- 2014 PAGE 3 OF 4 (2) MODERN INFO TECHNOLOGY P. LTD. VS.- ITO, ITA NO. 4294/DEL/2012; (3) ACIT VS.- IQBAL M. CHHAGALA, ITA NO. 877/MUM/2013. I AGREE WITH THE CONTENTION OF THE ASSESSEE. SINCE THE ASSESSEE HAS NOT DEBITED ANY OVERHEAD EXPENSES, THE REFORE, NO DISALLOWANCE UNDER RULE 8D(III) CAN BE MADE. IN THE RESULT, THESE GROUNDS ARE ALLOWED. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), TH E REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT OUT OF THE TOTAL DEDUCTION CLAIMED BY THE ASSESSEE ON ACCOUNT OF INT EREST AMOUNTING TO RS.1,98,49,627/-, DISALLOWANCE OF RS.99,11,183/- WA S MADE BY THE ASSESSING OFFICER UNDER SECTION 14A BY APPLYING THE FORMULA GIVEN IN RULE 8D(II) OF THE INCOME TAX RULES, 1962. BEFORE THE LD . CIT(APPEALS), IT WAS POINTED OUT BY THE ASSESSEE THAT THE TOTAL INTEREST EXPENDITURE OF RS.3,19,94,031/- WAS INCURRED BY HIM DURING THE YEA R UNDER CONSIDERATION AND OUT OF THE SAME, INTEREST EXPENDI TURE TO THE EXTENT OF RS.1,21,44,440/- WAS SUO MOTU DISALLOWED BY THE ASSESSEE UNDER SECTION 14A. SINCE THE DISALLOWANCE SO OFFERED BY THE ASSES SEE SUO MOTU ON ACCOUNT OF INTEREST EXPENDITURE WAS HIGHER THAN THE DISALLOWANCE MADE BY THE ASSESSING OFFICER BY APPLYING RULE 8D(III), THE LD. CIT(APPEALS) HELD THAT THERE WAS NO CASE TO MAKE A DISALLOWANCE BY THE ASSESSING OFFICER UNDER RULE 8D(II). HE ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO VERIFY THE CLAIM OF THE ASSESSEE AND ALLOW APPROPRI ATE RELIEF ON SUCH VERIFICATION. KEEPING IN VIEW ALL THESE FACTS AND C IRCUMSTANCES OF THE CASE, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE L D. CIT(APPEALS) WHICH CAN BE SAID TO HAVE CAUSED ANY GRIEVANCE TO THE REV ENUE AND EVEN THE LD. D.R. HAS NOT BEEN ABLE TO RAISE ANY MATERIAL CONTEN TION IN THIS REGARD. SIMILARLY THE LD. D.R. HAS NOT BEEN ABLE TO BRING A NYTHING ON RECORD TO REBUT OR CONTROVERT THE FINDING RECORDED BY THE LD. CIT(APPEALS) IN THE IMPUGNED ORDER THAT NO OVERHEAD EXPENSES WERE CLAIM ED BY THE ASSESSEE I.T.A. NO 2487/KOL/2017 ASSESSMENT YEAR: 2013- 2014 PAGE 4 OF 4 IN ORDER TO WARRANT ANY DISALLOWANCE UNDER SECTION 8D(III). WE, THEREFORE, FIND NO JUSTIFIABLE REASON TO INTERFERE WITH THE IM PUGNED ORDER OF THE LD. CIT(APPEALS) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND UPHOLDING THE SAME, WE DISMISS THIS APPEAL FILED BY THE REVENUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER26, 2018. SD/- SD/- (SATBEER SINGH GODARA) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 26 TH DAY OF SEPTEMBER, 2018 COPIES TO : (1) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-10(1), KOLKATA, AAYAKAR BHAWAN, 3 RD FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (2) SHRI JAIDEEP HALWASIYA, P-34, INDIA EXCHANGE PLACE, SAHA HOUSE, KOLKATA-700001 (3) COMMISSIONER OF INCOME TAX (APPEALS)-4, KOLKA TA, (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/D.D.O. INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.